About Us

Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

October 16, 2012

In the
most recent development in the historic case
against Chevron’s appalling pollution in the Amazon, the U.S. Supreme Court refused
to hear Chevron’s appeal of a lower court ruling last week. In so doing, the Supreme Court produced yet another denial of the company’s attempt to block an $18.2 billion dollar judgment against
the company in Ecuador. Chevron is trying to avoid paying the judgment that resulted from a successful lawsuit filed in Ecuador by residents of Lago Agrio in the Ecuadorian
Amazon for massive contamination of the region between 1964 and 1992.

Earlier
this year, the U.S. Second Circuit Court of Appeals threw out a ruling by a federal
judge in New York, which had temporarily blocked enforcement of the judgment. The appellate court asserted that U.S. law does
not permit “disappointed litigants in foreign cases” to ask the court to
“restrain efforts to enforce those foreign judgments against them, or to
preempt the courts of other countries from making their own decisions about the
enforceability of such judgments.” The appellate court chastised the
lower court’s attempt to block the Ecuadorean judgment, saying the move “risks
disrespecting the legal system” of Ecuador and wrongly presumes that a U.S.
court can act as “the definitive international arbiter of the fairness and
integrity of the world’s legal systems.” The U.S. Supreme Court’s
decision to not hear Chevron’s appeal suggests that they did not see a
compelling reason to question the appellate court’s reasoning.

Despite
having lost on the merits in the highest courts in Ecuador, and having been continually thwarted by U.S. courts in its attempts to halt enforcement, Chevron is not finished with its threat of a “lifetime of appellate and collateral litigation” to avoid complying with the judgment. The company is using the
extreme foreign investor rights in the U.S.-Ecuador Bilateral Investment Treaty
(BIT) to continue its campaign to evade justice via an "investor-state" case to be decided by an ad hoc tribunal of three private lawyers.

This is
not the only instance of corporations using international trade and investment
pacts to bypass the justice system of sovereign nations. In August, the
Australian High Court (equivalent to the U.S. Supreme Court) upheld the country’s landmark “plain
packaging” laws against an attack from Big Tobacco. Despite this, Australia’s landmark
tobacco control law remains under threat as Big Tobacco company Philip Morris
is challenging the law under the Hong Kong-Australia BIT. The U.S. company
incorporated a subsidiary in Hong Kong in order to launch the attack.

The
details of the cases are different - the Australian High Court ruled to uphold its
law on the merits of the case, while the U.S. Supreme Court refused to hear
Chevron’s appeal of a lower court ruling.
However, in both instances, deep-pocketed corporations are using trade
and investment pacts to bypass and belittle the highest courts, even in countries with highly respected and independent judiciaries.

Under the investor-state dispute settlement system enshrined in U.S. Free Trade Agreements (FTAs) and BITs, private tribunals
have awarded more than $2.5 billion in taxpayer compensation to corporations to
compensate them for “lost profits.” Despite such damage, these same rules are being expanded through the Trans-Pacific
Partnership (TPP). A leaked investment chapter from the TPP reveals that the
pact would require all TPP countries, including the United States, to allow foreign investors
to launch investor-state attacks on their governments, to be decided by unaccountable foreign tribunals. Understandably, Australia
has so far refused to be subjected to the investor-state
dispute settlement in the TPP, but the U.S. is still pushing TPP negotiating countries to put investor "rights" before their own public interests.

The
conclusion of the Chevron case is being closely monitored, and will have consequences
beyond Lago Agrio. Reuters reports that “oil companies are watching
the case closely because it may affect other cases accusing companies of
polluting the areas where they operate.” If Chevron is successful in its
attempts to avoid paying damages for egregious pollution, other companies will
have affirmation that they have a chance to circumvent responsibility for environmental destruction by using the extreme investor-state system.

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